City Auditor Denny Nester: Urban renewal has some work to do.
is a hot topic these days, because that's the vehicle the city plans to use to invigorate the southwest downtown area, as well as South Nevada Avenue.
The city already has nine urban renewal areas
, so it's worth checking in on those to see how things are shaking out.
A recent City Auditor's Office report, issued in November, did just that, and the picture isn't all rosy.
In one case — Lowell neighborhood development around the Police Operations center — the urban renewal project left the city holding the bag on nearly $1 million.
From the auditor's report:
The Lowell development project, however, was partially financed using a bridge loan from the City to the CSURA. The forecasted revenues from that development were not sufficient to repay the debt and in 2015 the City of Colorado Springs wrote off the entire outstanding balance of $846,988 as unpaid because the 25 year period had expired. This loan was between the CSURA and the City.
That can be found at the end of one of three "observations" made by City Auditor Denny Nester's office and four "opportunities," whatever those words mean. Back in the day, auditors reported "findings," but you know, PC verbiage infiltrates all sectors.
Anyhow, a rather bothersome "observation" is that the Urban Renewal Authority's
forecasts for its projects are way off the mark, and we do mean WAY OFF.
Here's a chart showing how three projects fell short of predictions in collecting sales tax money, which in turn is used to pay off bonds issued by the URA to fund the projects:
We all know what happened to the North Nevada project. It went into default on the bonds when revenues didn't match the forecast. As Nester notes in the audit, such bond issues aren't the obligation of the city, itself, however, so at least there's that to be happy about.
Here are Nester's other two "observations":
• URA had not developed a written procedure for financial close out of an urban renewal project.
• A right to audit clause was not included in the cooperation agreement.
And here are the "opportunities":
• The contract for the URA's director did not include performance measures.
• Inconsistencies were noted between four urban renewal development agreements.
• Proposed project costs did not always have third party review.
• Documented project management processes were not in place.
If you want to read the entire report, help yourself:
See related PDF